The answer is fire your expensive advisor. They are nothing more than extremely expensive hand holders. DIY is easy. Pretty good advice there at the end Rob. I’ve been thinking about wort with vanguard for that very reason.
I believe Edelman charged me 1.65% quarterly with around $500k in it......after 2 years I woke up. Been with Vanguard about 4 years now.....best move I made.
Thanks for the video Rob! I think your last point hints at the biggest reason for an advisor. Some people (whether by disinterest, lack of education, or improper temperament) do not want to manage their impt. finances. They consider the matter too impt., and themselves too unqualified, to handle their finances on their own. THAT is really when an advisor can be helpful. For instance, my father managed my parents' nest egg all his life. But, when he died, my 80 yr old mother (a college educated teacher) had no idea where to start or any interest in learning...and was intimidated by the process (e.g.RMD, or moving money, etc.). And, let's face it, many people have declining mental abilities as they age. She wanted someone she could trust who would tell her what to do, and where to sign. Thie advisor wasn't beating the market...or even trying to. My mom was basically paying her 15-20,000 per year to hold her hand. At the first opportunity we stopped that gravy train (which amounted to about 1 1/2 months rent at her nursing home).
Wow! Thank you so much for answering my question Rob!! You make such great points and explained everything clearly. This video really helped me build up the nerve I will need to be a DIY investor. As far as I am concerned yours is the #1 financial channel on TH-cam!
Ya, no one needs comprehensive planning from a fiduciary (CFP professional) who’s educated and experienced in investments, tax planning, estate planning, insurance and retirement income strategies. I mean it only takes roughly 2yrs to get that designation, a college degree and three years experience as a planner.Oh and pass 6 preliminary exams followed by a 7yr comprehensive board exam. I mean there’s know way a person like that could possibly provide more than 1% total return each year to your total net worth, right…?
@@antiquatedandroid7952 Warren Buffet says, "You're looking for three things in a person, intelligence, energy, and integrity. And if they don't have the last one, don't even bother with the first two.
@@antiquatedandroid7952 If he projects that he can generate higher returns by managing your money, you might need to do some research before you become a client.
Great video Rob. You are absolutely right. You don’t want to pay 1% of your assets for Financial, Estate planning, Refinancing etc. it costs a fraction
Another point to consider, many financial advisors buy the "institutional" class mutual funds, in many cases, the fees are less than "retail" type of mutual funds... However, they CANNOT be transfered "in-kind" if you want to leave, the only way is to liquidate them and trigger tax event
AUM is a scandalous ripoff, particularly in retirement. How to turn the 4% rule into a 3% rule? Pay 1% AUM. 25% of your portfolio income going to your advisor.
Hi Rob! This is Jose Toribio from Madrid, Spain. I love your channel and I agree 100% with your video. I have been a FA for over 28 years (Merrill Lynch & Citigroup and now on my own). I would add to your video that I always ask my new clients to read the Psychology of money by Morgan Housel and I always follow a 30bps TER portfolio including my fees. I also believe that I a good FA should show his/her clients his/her own personal portfolio and be available 24/7. That in my experience adds more value and it's not quantified but appreciated. Thank you so much for your channel! Jose
What has happened to the finial planning industry? Seems like all the firms just want to gather assets at 1%. That’s hundreds of thousands $$ over 20-30 years in retirement. You used to just be able to buy a plan. You pay for the plan and set it up for long term. I can’t find a financial planner, just “wealth managers”. Since we are now in high inflation and a highly volatile dropping market…how can anyone justify paying these annual fees.
Am in agreement Rob, am slowly setting up my accounts to fire my advisor. All the referrals i get they are from friends, who i trust. Thank goodness he only manages 1/4 of my portfolio. My brokerage firm has also been a huge help, in addition to your podcasts Rob!
When I rolled over a Merrill Lynch account to Vanguard the ML advisor said that once he authorizes the transfer that its out of their hands and if the money is lost its not their problem. He was trying to scare me into staying. VG helped make the process smooth.
He’s probably not trying to scare you at all. He just wants you on record saying that you understand to cover his ass from compliance. Which, honestly, is usually the wise route to take.
I am impressed with how even tempered and fair minded you are when discussing hot button issues like this. I would cuss every time I thought about a 1% fee!
Great video! I’d been thinking about this issue for a while. Ive always managed our accounts but if something were to happen to me my wife would not want that additional responsibility.
This is a very good video. I believe that I am intelligent enough to choose 3-4 mutual funds to invest in long term, on my own, using dollar cost averaging. Each fund has somebody looking after my interest already: a fund manager. I already pay an expense ratio to them. If they fail to do their job then, they and their team get fired… or I just change funds.
Only a couple scenarios I would consider hiring a financial advisor. 1) If advisors got paid a % of annual gains only, not the total portfolio. : meaning 0% or less during bad years. 2) If I was wealthy enough (or foolish enough) to invest large amounts in individual stocks/securities. Then the advisor would basically be my fund manager.
There are good years and bad years when investing and nothing can be guaranteed. The annual fee (% of the account value) does not all go to the individual advisor. You are paying for a few things with this: 1) the company’s infrastructure and compliance oversight. They take their cut first before the advisor gets anything. 2) the advisor’s knowledge - this person went to school for a long time to help people choose appropriate strategies - which is typically why people hire financial advisors. 3) If it’s in a qualified account (like an IRA) most of these managed accounts are rebalanced quarterly to your risk level. Whether it’s a Buy and Hold strategy in a brokerage account or an actively managed fee-based account - no one can guarantee results. They can help you manage your risk, but they are not day traders trying to time the market. They’re investing in funds with strong track records for nice returns. Their goal is not to outperform the S&P 500 because if it was then 60 year olds would be 100% invested in the stock market which most of the time is not at all appropriate. All in all - financial advisors get a lot of criticism because of some bad apples, but most really are good people trying to help others. And it’s not a sin to want to get paid for your work.
I used Gabelli investment company for 20 years. 1%. They outperformed the S&P for the first 13 or so years, by 2-3% net. Then they didn’t. Severed relations 2 years ago
Rob, same thought as you related to finding an adviser for my wife should I not be around. She has no interest and has little knowledge in the space. Son is better but don’t want to burden him unless he wants to help. Best way is for me to find someone now just in case.
Move everything into ETFs. Easy to open the accounts and they manage themselves. Do not worry about capital gains tax. It has to be paid eventually so best pay it now and save yourself hundreds of thousands of dollars over the next 30 years. The financial advisor who charge AUM is nuts
First Rob, you are an excellent presenter. Since you like Vanguard, please reference their data that the value of a Financial Advisor MAY add between 1 to 3 percent over and above the fee's charged by the Financial Advisor.
@@rob_berger I agree there are assumptions in that report. However, the assumptions are based on some historical observation to provide a basis. Mileage will vary. You compared the value of a financial advisor (as a generalization) to an estate attorney, which I believe is a fallacy. You don't pay them the same as they perform separate jobs and only one has incentive to strengthen your financial plan. One of a few points that I think discount your overall good message. To be clear, I think your message is good. I appreciate it. A good financial advisor should demonstrate how they deliver "value" in multiples of his/her cost and be broader in scope than investment management. You were hitting on this point. Unfortunately, many financial advisors - start out with good attention - end up accumulating client assets as priority number one and the practices they build are to support that accumulation business model. If someone wants to work with a financial advisor (or does), ask directly about their costs, the embedded portfolio fees, and how they can quantify the "value" of their service to offset the costs and provide an overall return on the scope of the engagement. They should be able to demonstrate systems, technical competency, and have a practice (team, philosophy, and resources) that supports that. A solo advisor with an assistant serving 300 client families is probably not capable to deliver much more than generic boilerplate advice (even that has value to a lot of people). Their business model disincentivizes them from doing more. A strong message I'd advocate for is to stop being sold and be an informed buyer with clear objectives. Understand how the advisor and his practice intends to deliver what they define as "value" - what is the value proposition? Value is perceived differently at the individual level and anyone you hire should be clear on what you define as value. The most successful relationships are when expectations are aligned and value is contributed and extracted appropriately. An advisor that diverges from his value proposition to accommodate you (even with the best of intention) creates a mismatch and is a red flag.
for most people my advise would be no, you can not argue against the fact that retail investors do 3% worse then the market. they need to be protected from themselfs. ofc this opinion is not popular and most viewers here will disagree. but remember guys.. you are already a advanced retail investor for indexing and educating yourself
I agree completely. I’m a CPA and work mostly with small business owners. The vast majority of them cannot do it themselves and wouldn’t even do anything at all for retirement if I, or someone, didn’t encourage them to and basically hold their hand through the process. Frankly, I include my 30 years ago self in that group as well. I have had my retirement accounts at EDJ for many years in A share American funds which is a much better arrangement than AUM fees. Commissions go down as you get more money in the accounts. Now for the even more unpopular opinion……. These people would still be light years better off paying AUM fees than doing nothing. This cannot be disputed. For many people the choice is not AUM vs DIY, it’s AUM vs doing nothing. Which is better?
An AUM arrangement is nearly a complete waste of money especially if the portfolio in question is mostly or exclusively made up of index funds!! In an AUM arrangement, the client takes all the risk and the advisor gets rewarded regardless of outcome. It’s bonkers and arguably a racket.
The main focus should be on the value that advisors provide to clients who understand the complexity of managing their money. Selling during a market bottom could absolutely hurt their financial situation, requiring much more than a 1% return to get back to even. Professional management should not be cheap or free. Just like a good CPA, attorney, etc.
We have a FA for just over a year. Our total fee including funds is .75% of assets under management. Which does not include assets in our 2 annuities or our CD's. I do not want a FA. I can do just as good a job with no problem. My wife on the other hand doesn't want to deal with it and wants someone to guide her. She always argues what happens if you die first and i don't know what to do? I am slowly working on prying her away. Every quarter i show her in dollars what she is paying out in fee's. Hopefully, by mid or end of 2024 in can convince her to leave. The problem in her eyes is if we leave everything gets separated again. Like it already isn't, but under his management it looks like everything is together. Geesh.
"...there are many services out there that will handle your investments for you for far less than 1%". Please name some, because I'm not finding any. Are you referring to online services such as Betterment, or actual advisors who charge less than 1%? HELP!
1.5%. He underperformed last year with high ER's. He's fired now and is being difficult with producing some documents I'm entitled to. A letter to FINRA might be in his future.
Thanks a lot, I struggle with answering the questions. "What are your goals?" I just don't know. We've got Fidelity (previous job) and Vanguard ( New job) my wife is a teacher Its tough to get all the accounts in front of us really. I've got a good friend at Ameriprise that I do trust but I don't want to get jacked around with fees if I can do simply investing over time on my own. I feel like a got soured on financial advisors because of my experience with Northwestern Mutual. They were so adamant that I needed a Variable annuity and it did it for like 25k. just silly.
@Paul Kyser Fidelity and Vanguard are excellent places to have your accounts. You could be really basic and just pick target date funds. Or you could come up with a simple stategy, like the 3 fund strategy. Vanguard has a life strategy growth fund, 80% stocks 20% bonds, I have that fund and have been happy with it. Very low expense ratio. Learn more about funds, listen to more of Rob's videos. Andrew Hallam has two books that might be helpful.
If advisor was any good, they would quit the advising game and go make money investing. Why work when you don't have to? Because they can't make a living following their own advice.
This was a great video,,i too was curious about this question and came across a book called "everybody wants your money" by David Latko the book has a couple great chapters of how financial advisors take advantage of you,what to ask and look for when choosing a financial advisor and how to negotiate a fair fee..its worth buying just for a handful of great chapters.
Doesn't make sense to pay 1% if all the money being managed is already being managed by another company (i.e. index and ETFs). That's like paying somebody 1% to manage your 401k. Advisors are great for people who don't want to manage their own money, even at a minimal level. I get it, learning about stocks and funds and investing money outside of your 401k takes effort and not everybody wants to deal with that. This person sounds like she's already familiar with this type of thing: she's not the type of person who should be hiring an investment advisor and paying them 1% to do what she already knows how to do.
Did I miss the section on how to dissolve a relationship with an advisor? I am thinking about it and would like to know the best way to go about doing that.
I have always done better than advisers. Touchy subject. But who am I to say. The entire nation uses them. Remember even Bogle could not convince Vanguard. Vanguard has some good managed funds. If you make money, you have to pay taxes. Sooner or later.
Edwards Jones - terrible. Maybe you find an advisor who is good, but that would be a matter of luck. Most are not so honest, nor that competent. During the time of July 2021 to July 2024 my IRA lost $500 in value. The stock market was going great and the money market was paying about 4%. My account should have grown 12% to 15% easily. They always want to review your account and then balance it which means selling and buying. You most likely lose money each time. High fee, high commission mutual funds. On August 10 I went to a New York Life agent (he has fiduciary designation) to roll my accounts over into annuities. It is now August 25 and Edward Jones still have not completed their part. The life agent said they would drag their feet.
Great video. I am in the process of moving out from a financial advisor. He has me in 6 different actively managed accounts. None of which has ticker symbols. I guess the firm has a contract which mimics the activity of the specific funds. What advice would you give of transferring out of those funds?
Duh!! Do you even need to ask that question?? You will lose thousands of dollars through the years. Spend a few hours studying on your own. It will pay about $1000/ hr
Awesome presentation! I’ve been weighing the value versus cost for quite awhile, given the resources now available for DIY. Along the same lines… is it important to have more than one broker, particularly if a DIY investor? I was thinking that if a large company (Schwab, Fidelity, etc) has an issue where my assets with them would be at risk, then most likely the entire industry would be at risk and diversification wouldn’t make much difference. Any advantage to spreading your investments to multiple brokers, if costs are nearly the same? Thanks!
I have an actively managed Roth ira opened in 2005. I'm curious if it would be a good idea to have an audit done on my retirement account by an independent financial advisor to ensure my advisor is doing a good job for me.
What do you think of Vanguard's Advisory fees of 0.3%? I'm trying this service and have found it useful as a sounding board and also access to many managed funds that are closed to other investors. As I near retirement, it gets more complicated, so this is giving me some peace of mind though I still don't like the fees.
Well, at $5 million, you can go with Vanguard's Wealth Management services, where fees begin to drop as you exceed $5M. It also adds lots of other services.
@@davidk6498 I'm in the middle of that range, so the fees aren't insignificant. But I do like access to some of those closed funds like Capital Opportunity and Prime Cap that have good track records, though primarily I'm an index fund guy.
If you're in a bond fund and are investing more than 3-4 years grow some balls or get a financial advisor to encourage you to get into the right equity investment for the long term. SURE any joe shmo can pick a bunch of tech funds but an advisor will make sure you're not chasing a timely sector investment on your own... more than likely you'l actually be properly diversified depending on your own risk profile
I can handle my investments just fine. BUT - I would like help on tax strategy, backdoor roth conversion analysis, ACA credit opitmization, etc. Wonder if i can just pay a fixed fee for that analysis?
Hello, I have a CFP trying to convince my wife and I to move our large accounts to AUM. I thought showing them this fee calculator would be great; however it is no longer available. Do you know of any similar alternatives?
Hello, my husband just left his company of 35 years after it went out of business. He has a 401k from this company with John Hancock. His balance is 553,000. As of his last quarterly statement, he was paying over $1,000.00 a quarter in admin fees. Not advisor fees, but admin fees. I am assuming this is because he came from of small company. I think this amount is crazy. In your opinion, would he be better of rolling his money over into an IRA account with another company. In the past, I have rolled money from a 401k into a Fidelity IRA and I know I do not pay the same high fee that he does. What would be the pros and cons of rolling this money over. Also, his company will no longer exist so what impact my this have on his 401k with John Hancock. Thanks in advance for your help! Pam M.
The answer is fire your expensive advisor. They are nothing more than extremely expensive hand holders. DIY is easy. Pretty good advice there at the end Rob. I’ve been thinking about wort with vanguard for that very reason.
I believe Edelman charged me 1.65% quarterly with around $500k in it......after 2 years I woke up. Been with Vanguard about 4 years now.....best move I made.
Ouch..... Glad you woke up!
I think I’m going to get out of this too. The banks are taking 1.78% from me and who knows what else
1.65% quarterly is 6.5% per year. I’m not buying that
Thanks for the video Rob! I think your last point hints at the biggest reason for an advisor. Some people (whether by disinterest, lack of education, or improper temperament) do not want to manage their impt. finances. They consider the matter too impt., and themselves too unqualified, to handle their finances on their own. THAT is really when an advisor can be helpful. For instance, my father managed my parents' nest egg all his life. But, when he died, my 80 yr old mother (a college educated teacher) had no idea where to start or any interest in learning...and was intimidated by the process (e.g.RMD, or moving money, etc.). And, let's face it, many people have declining mental abilities as they age. She wanted someone she could trust who would tell her what to do, and where to sign. Thie advisor wasn't beating the market...or even trying to. My mom was basically paying her 15-20,000 per year to hold her hand. At the first opportunity we stopped that gravy train (which amounted to about 1 1/2 months rent at her nursing home).
Wow! Thank you so much for answering my question Rob!! You make such great points and explained everything clearly. This video really helped me build up the nerve I will need to be a DIY investor. As far as I am concerned yours is the #1 financial channel on TH-cam!
Let’s talk, message me👆🏻📩
Financial freedom. Yes! Free yourself from 1% advisor fees- a drain on the "magic of compounding" (as Buffet would say). Like a vampire.
Let’s talk, message me👆🏻
It is a good feeling to have direct control over your money.
Ya, no one needs comprehensive planning from a fiduciary (CFP professional) who’s educated and experienced in investments, tax planning, estate planning, insurance and retirement income strategies. I mean it only takes roughly 2yrs to get that designation, a college degree and three years experience as a planner.Oh and pass 6 preliminary exams followed by a 7yr comprehensive board exam. I mean there’s know way a person like that could possibly provide more than 1% total return each year to your total net worth, right…?
@@antiquatedandroid7952 Warren Buffet says, "You're looking for three things in a person, intelligence, energy, and integrity. And if they don't have the last one, don't even bother with the first two.
@@antiquatedandroid7952 If he projects that he can generate higher returns by managing your money, you might need to do some research before you become a client.
Great video Rob. You are absolutely right. You don’t want to pay 1% of your assets for Financial, Estate planning, Refinancing etc. it costs a fraction
Let’s talk, message me👆🏻
Another point to consider, many financial advisors buy the "institutional" class mutual funds, in many cases, the fees are less than "retail" type of mutual funds... However, they CANNOT be transfered "in-kind" if you want to leave, the only way is to liquidate them and trigger tax event
Let’s talk, message me👆🏻📩
AUM is a scandalous ripoff, particularly in retirement. How to turn the 4% rule into a 3% rule? Pay 1% AUM. 25% of your portfolio income going to your advisor.
advisor should be adding percentages on capital gain and paying for itself. otherwise indeed its lost money.
For my small account, he wants 1.75%. I'm hesitant and looking for options. Suggestions, please.
@@roseother8306 index is ur solution
@@roseother8306 index. 0.04% cost and u get market returns
@@roseother8306 Hire an hourly-paid advisor.
I left my advisor at Raymond James. My husband and I picked new investments and I ran my strategy by a free advising service I have through my job.
Hi Rob! This is Jose Toribio from Madrid, Spain. I love your channel and I agree 100% with your video. I have been a FA for over 28 years (Merrill Lynch & Citigroup and now on my own). I would add to your video that I always ask my new clients to read the Psychology of money by Morgan Housel and I always follow a 30bps TER portfolio including my fees. I also believe that I a good FA should show his/her clients his/her own personal portfolio and be available 24/7. That in my experience adds more value and it's not quantified but appreciated. Thank you so much for your channel! Jose
What has happened to the finial planning industry? Seems like all the firms just want to gather assets at 1%. That’s hundreds of thousands $$ over 20-30 years in retirement. You used to just be able to buy a plan. You pay for the plan and set it up for long term. I can’t find a financial planner, just “wealth managers”. Since we are now in high inflation and a highly volatile dropping market…how can anyone justify paying these annual fees.
Find an hourly advisor. At $250 to $350 an hour, that's really a bargain.
Am in agreement Rob, am slowly setting up my accounts to fire my advisor. All the referrals i get they are from friends, who i trust. Thank goodness he only manages 1/4 of my portfolio.
My brokerage firm has also been a huge help, in addition to your podcasts Rob!
Very relevant to a trust for which I am trustee, as I consider moving assets from advisor managed to self directed. Thanks for choosing this topic.
When I rolled over a Merrill Lynch account to Vanguard the ML advisor said that once he authorizes the transfer that its out of their hands and if the money is lost its not their problem. He was trying to scare me into staying. VG helped make the process smooth.
He’s probably not trying to scare you at all. He just wants you on record saying that you understand to cover his ass from compliance. Which, honestly, is usually the wise route to take.
I am impressed with how even tempered and fair minded you are when discussing hot button issues like this. I would cuss every time I thought about a 1% fee!
This was excellent and timely for me - thank you so much!
Great video! I’d been thinking about this issue for a while. Ive always managed our accounts but if something were to happen to me my wife would not want that additional responsibility.
This is a very good video. I believe that I am intelligent enough to choose 3-4 mutual funds to invest in long term, on my own, using dollar cost averaging. Each fund has somebody looking after my interest already: a fund manager. I already pay an expense ratio to them. If they fail to do their job then, they and their team get fired… or I just change funds.
Only a couple scenarios I would consider hiring a financial advisor. 1) If advisors got paid a % of annual gains only, not the total portfolio. : meaning 0% or less during bad years. 2) If I was wealthy enough (or foolish enough) to invest large amounts in individual stocks/securities. Then the advisor would basically be my fund manager.
Let’s talk, message me👆🏻📩
There are good years and bad years when investing and nothing can be guaranteed. The annual fee (% of the account value) does not all go to the individual advisor. You are paying for a few things with this:
1) the company’s infrastructure and compliance oversight. They take their cut first before the advisor gets anything.
2) the advisor’s knowledge - this person went to school for a long time to help people choose appropriate strategies - which is typically why people hire financial advisors.
3) If it’s in a qualified account (like an IRA) most of these managed accounts are rebalanced quarterly to your risk level.
Whether it’s a Buy and Hold strategy in a brokerage account or an actively managed fee-based account - no one can guarantee results. They can help you manage your risk, but they are not day traders trying to time the market. They’re investing in funds with strong track records for nice returns. Their goal is not to outperform the S&P 500 because if it was then 60 year olds would be 100% invested in the stock market which most of the time is not at all appropriate. All in all - financial advisors get a lot of criticism because of some bad apples, but most really are good people trying to help others. And it’s not a sin to want to get paid for your work.
1%=25% of your 4% yearly distribution. That's very generous to give your advisor 25% of your yearly income!
I used Gabelli investment company for 20 years. 1%. They outperformed the S&P for the first 13 or so years, by 2-3% net. Then they didn’t. Severed relations 2 years ago
It's really hard to beat the market year after year.
@@carlbook2051 Jack Bogle said it all when he emphasized reversion to the mean
My advisor has beaten the market by 2-3% net of fees every year and he’s a pretty dopey guy
Rob, same thought as you related to finding an adviser for my wife should I not be around. She has no interest and has little knowledge in the space. Son is better but don’t want to burden him unless he wants to help. Best way is for me to find someone now just in case.
Let’s talk, message me👆🏻
Move everything into ETFs. Easy to open the accounts and they manage themselves. Do not worry about capital gains tax. It has to be paid eventually so best pay it now and save yourself hundreds of thousands of dollars over the next 30 years. The financial advisor who charge AUM is nuts
Thank you for a balanced and objective look at this issue.
First Rob, you are an excellent presenter. Since you like Vanguard, please reference their data that the value of a Financial Advisor MAY add between 1 to 3 percent over and above the fee's charged by the Financial Advisor.
I've read that report. Lots of assumptions, but I'm glad you brought it up. I'll do a separate video covering it.
@@rob_berger I agree there are assumptions in that report. However, the assumptions are based on some historical observation to provide a basis. Mileage will vary. You compared the value of a financial advisor (as a generalization) to an estate attorney, which I believe is a fallacy. You don't pay them the same as they perform separate jobs and only one has incentive to strengthen your financial plan. One of a few points that I think discount your overall good message. To be clear, I think your message is good. I appreciate it.
A good financial advisor should demonstrate how they deliver "value" in multiples of his/her cost and be broader in scope than investment management. You were hitting on this point. Unfortunately, many financial advisors - start out with good attention - end up accumulating client assets as priority number one and the practices they build are to support that accumulation business model. If someone wants to work with a financial advisor (or does), ask directly about their costs, the embedded portfolio fees, and how they can quantify the "value" of their service to offset the costs and provide an overall return on the scope of the engagement. They should be able to demonstrate systems, technical competency, and have a practice (team, philosophy, and resources) that supports that. A solo advisor with an assistant serving 300 client families is probably not capable to deliver much more than generic boilerplate advice (even that has value to a lot of people). Their business model disincentivizes them from doing more.
A strong message I'd advocate for is to stop being sold and be an informed buyer with clear objectives. Understand how the advisor and his practice intends to deliver what they define as "value" - what is the value proposition? Value is perceived differently at the individual level and anyone you hire should be clear on what you define as value. The most successful relationships are when expectations are aligned and value is contributed and extracted appropriately. An advisor that diverges from his value proposition to accommodate you (even with the best of intention) creates a mismatch and is a red flag.
for most people my advise would be no, you can not argue against the fact that retail investors do 3% worse then the market.
they need to be protected from themselfs.
ofc this opinion is not popular and most viewers here will disagree.
but remember guys.. you are already a advanced retail investor for indexing and educating yourself
I agree completely. I’m a CPA and work mostly with small business owners. The vast majority of them cannot do it themselves and wouldn’t even do anything at all for retirement if I, or someone, didn’t encourage them to and basically hold their hand through the process. Frankly, I include my 30 years ago self in that group as well. I have had my retirement accounts at EDJ for many years in A share American funds which is a much better arrangement than AUM fees. Commissions go down as you get more money in the accounts. Now for the even more unpopular opinion……. These people would still be light years better off paying AUM fees than doing nothing. This cannot be disputed. For many people the choice is not AUM vs DIY, it’s AUM vs doing nothing. Which is better?
Man, you are good. Thanks Rob.
An AUM arrangement is nearly a complete waste of money especially if the portfolio in question is mostly or exclusively made up of index funds!! In an AUM arrangement, the client takes all the risk and the advisor gets rewarded regardless of outcome. It’s bonkers and arguably a racket.
Robo investing may be the answer, just like realtors got greedy, it’s FAs turn to stop ripping off people.
The main focus should be on the value that advisors provide to clients who understand the complexity of managing their money. Selling during a market bottom could absolutely hurt their financial situation, requiring much more than a 1% return to get back to even. Professional management should not be cheap or free. Just like a good CPA, attorney, etc.
Thanks Rob! Very practical advice
Let’s talk, message me👆🏻📩
We have a FA for just over a year. Our total fee including funds is .75% of assets under management. Which does not include assets in our 2 annuities or our CD's. I do not want a FA. I can do just as good a job with no problem. My wife on the other hand doesn't want to deal with it and wants someone to guide her.
She always argues what happens if you die first and i don't know what to do? I am slowly working on prying her away. Every quarter i show her in dollars what she is paying out in fee's. Hopefully, by mid or end of 2024 in can convince her to leave. The problem in her eyes is if we leave everything gets separated again.
Like it already isn't, but under his management it looks like everything is together. Geesh.
"...there are many services out there that will handle your investments for you for far less than 1%". Please name some, because I'm not finding any. Are you referring to online services such as Betterment, or actual advisors who charge less than 1%? HELP!
Rob, I like your Batman, (with purple & blue glows) keyboard. It comes in black. (see the movie reference)
1.5%. He underperformed last year with high ER's. He's fired now and is being difficult with producing some documents I'm entitled to.
A letter to FINRA might be in his future.
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Rob your a Legend mate. I think its about time we get that Avantis Deep Dive. P.S. More chess puzzles
Thanks a lot, I struggle with answering the questions. "What are your goals?" I just don't know. We've got Fidelity (previous job) and Vanguard ( New job) my wife is a teacher Its tough to get all the accounts in front of us really. I've got a good friend at Ameriprise that I do trust but I don't want to get jacked around with fees if I can do simply investing over time on my own. I feel like a got soured on financial advisors because of my experience with Northwestern Mutual. They were so adamant that I needed a Variable annuity and it did it for like 25k. just silly.
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@Paul Kyser Fidelity and Vanguard are excellent places to have your accounts. You could be really basic and just pick target date funds. Or you could come up with a simple stategy, like the 3 fund strategy. Vanguard has a life strategy growth fund, 80% stocks 20% bonds, I have that fund and have been happy with it. Very low expense ratio. Learn more about funds, listen to more of Rob's videos. Andrew Hallam has two books that might be helpful.
If advisor was any good, they would quit the advising game and go make money investing. Why work when you don't have to? Because they can't make a living following their own advice.
This was a great video,,i too was curious about this question and came across a book called "everybody wants your money" by David Latko the book has a couple great chapters of how financial advisors take advantage of you,what to ask and look for when choosing a financial advisor and how to negotiate a fair fee..its worth buying just for a handful of great chapters.
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Doesn't make sense to pay 1% if all the money being managed is already being managed by another company (i.e. index and ETFs). That's like paying somebody 1% to manage your 401k. Advisors are great for people who don't want to manage their own money, even at a minimal level. I get it, learning about stocks and funds and investing money outside of your 401k takes effort and not everybody wants to deal with that. This person sounds like she's already familiar with this type of thing: she's not the type of person who should be hiring an investment advisor and paying them 1% to do what she already knows how to do.
Great video. Thank you.
Did I miss the section on how to dissolve a relationship with an advisor? I am thinking about it and would like to know the best way to go about doing that.
Just decide on where you want to move your money to next and the new company will help you move the money.
I have always done better than advisers. Touchy subject. But who am I to say. The entire nation uses them. Remember even Bogle could not convince Vanguard. Vanguard has some good managed funds. If you make money, you have to pay taxes. Sooner or later.
I once paid an advisor 2.25% to manage my money subpar to the markets. Ugh.
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Edwards Jones - terrible. Maybe you find an advisor who is good, but that would be a matter of luck. Most are not so honest, nor that competent. During the time of July 2021 to July 2024 my IRA lost $500 in value. The stock market was going great and the money market was paying about 4%. My account should have grown 12% to 15% easily. They always want to review your account and then balance it which means selling and buying. You most likely lose money each time. High fee, high commission mutual funds. On August 10 I went to a New York Life agent (he has fiduciary designation) to roll my accounts over into annuities. It is now August 25 and Edward Jones still have not completed their part. The life agent said they would drag their feet.
Great video. I am in the process of moving out from a financial advisor. He has me in 6 different actively managed accounts. None of which has ticker symbols. I guess the firm has a contract which mimics the activity of the specific funds. What advice would you give of transferring out of those funds?
My bank is taking 1.78% makes me feel sick. $540 a month almost
I'd ask myself how that cost compares to a fee for service based adviser providing advise on an as needed basis.
Duh!! Do you even need to ask that question?? You will lose thousands of dollars through the years. Spend a few hours studying on your own. It will pay about $1000/ hr
Awesome presentation! I’ve been weighing the value versus cost for quite awhile, given the resources now available for DIY. Along the same lines… is it important to have more than one broker, particularly if a DIY investor? I was thinking that if a large company (Schwab, Fidelity, etc) has an issue where my assets with them would be at risk, then most likely the entire industry would be at risk and diversification wouldn’t make much difference. Any advantage to spreading your investments to multiple brokers, if costs are nearly the same? Thanks!
Yea..1 percent is alot when you convert it to dollar amount
I have an actively managed Roth ira opened in 2005. I'm curious if it would be a good idea to have an audit done on my retirement account by an independent financial advisor to ensure my advisor is doing a good job for me.
What do you think of Vanguard's Advisory fees of 0.3%? I'm trying this service and have found it useful as a sounding board and also access to many managed funds that are closed to other investors. As I near retirement, it gets more complicated, so this is giving me some peace of mind though I still don't like the fees.
I guess it would depend on .3 percent of 5 million or 500 thousand ?
Well, at $5 million, you can go with Vanguard's Wealth Management services, where fees begin to drop as you exceed $5M. It also adds lots of other services.
I think it's definitely an option to consider.
@@davidk6498 I'm in the middle of that range, so the fees aren't insignificant. But I do like access to some of those closed funds like Capital Opportunity and Prime Cap that have good track records, though primarily I'm an index fund guy.
What do you think of buying funds like GUT and CLM? Is there a catch with these funds that I'm not seeing?
If you're in a bond fund and are investing more than 3-4 years grow some balls or get a financial advisor to encourage you to get into the right equity investment for the long term. SURE any joe shmo can pick a bunch of tech funds but an advisor will make sure you're not chasing a timely sector investment on your own... more than likely you'l actually be properly diversified depending on your own risk profile
1% is great
I can handle my investments just fine. BUT - I would like help on tax strategy, backdoor roth conversion analysis, ACA credit opitmization, etc. Wonder if i can just pay a fixed fee for that analysis?
I have a fee only advisor with Ameriprise. She does this for me.
Hello, I have a CFP trying to convince my wife and I to move our large accounts to AUM. I thought showing them this fee calculator would be great; however it is no longer available. Do you know of any similar alternatives?
Have the Advisor translate the AUM % to $. Then ask, show me that Im getting x$ worth of service?
Hello, my husband just left his company of 35 years after it went out of business. He has a 401k from this company with John Hancock. His balance is 553,000. As of his last quarterly statement, he was paying over $1,000.00 a quarter in admin fees. Not advisor fees, but admin fees. I am assuming this is because he came from of small company. I think this amount is crazy. In your opinion, would he be better of rolling his money over into an IRA account with another company. In the past, I have rolled money from a 401k into a Fidelity IRA and I know I do not pay the same high fee that he does. What would be the pros and cons of rolling this money over. Also, his company will no longer exist so what impact my this have on his 401k with John Hancock. Thanks in advance for your help! Pam M.
E4 or D4?
Both, but mainly e4.